The Chapter 13 Process (Part 5)

There are many different types of Chapter 13 plans, though they are all based on the principle that the debtor is using all of his available money to pay towards his debts.  So, a debtor promises to pay a set amount each month to the trustee who administers the plan.

The most common type of plan is one where the debtor defines how much to pay each “class” of creditors.  Thus, a debtor might owe $3,000 in taxes, and therefore will designate $50 a month towards that debt for 60 months.  The debtor then determines how much of his unsecured debt gets paid after administrative costs, secured debts paid through the plan, and priority debts are paid.

The other common type of plan is the “pot” plan.  The debtor determines what is available each month to pay, and the trustee is responsible for determining how it gets divided up. 

The court in your district will determine which type of plan for you to use.  Further, some districts issue a “form” plan that you use, and some districts allow various structures.  It’s best to have competent counsel help you through this – he or she will know the plan to use and how to get it confirmed.